Financial Statement Analysis Project -- a Comparative Analysis of Oracle Corporation and Microsoft Corporation

http://www.oracle.com/us/corporate/investor-relations/sec/index.html

http://www.microsoft.com/investor/SEC/default.aspx?year=2007

This course contains a course project where you will be required to submit parts of the project at various stages within your course. Using the financial statements for Oracle Corporation and Microsoft Corporation, respectively, you will calculate and compare the financial ratios listed below for the fiscal year ending 2007 and prepare your comments about the liquidity, solvency and profitability of the two companies based on your ratio calculations. The project is divided into three parts with each part becoming due at a different date as shown in your syllabus.

Part 1

Prepare a four-column worksheet in Excel, with the left-most column (column 1) to write the ratio names, the second column from the left (column 2) to show the calculation of each ratio for Oracle Corporation, the second column from the right (column 3) to show the calculation of each ratio for Microsoft Corporation, and the right-most column (column 4) to include your DETAILED comments about each ratio and what the ratio tells you about each company under study. Calculate each of the following six ratios.

1. Earnings per Share

2. Current Ratio

3. Gross Profit Rate

4. Profit Margin Ratio

5. Inventory Turnover Ratio

6. Days in Inventory (Average Age of Inventory)

Your spreadsheet will look like this:

Part 2

Prepare a four-column worksheet in Excel, column 1 to write the ratio names, column 2 to show the calculation of each ratio for Oracle Corporation, column 3 to show the calculation of each ratio for Microsoft Corporation, and column 4 to include your DETAILED comments about each ratio and what the ratio tells you about each company under study.

Calculate each of the following six ratios.

1. Receivable Turnover Ratio

2. Average Collection Period

3. Assets Turnover Ratio

4. Return on Assets Ratio

5. Debt to Total Assets Ratio

6. Times Interest Earned Ratio

Please upload your Excel file in the appropriate Dropbox according to the deadline shown in the syllabus. Unless you receive permission from the instructor to delay the submission, failure to turn in this part of the project by the due date may result in a significantly lower grade, including a grade of zero, for the part.

Part 3

Prepare a four-column worksheet in Excel, column 1 to write the ratio names, column 2 to show the calculation of each ratio for Oracle Corporation, column 3 to show the calculation of each ratio for Microsoft Corporation, and column 4 to include your DETAILED comments about each ratio and what the ratio tells you about each company under study. Remember to copy and paste the ratio calculations and interpretations from the first two parts of the project in this worksheet, in addition to calculating the following six ratios.

1. Payout ratio

2. Return on Common Stockholders' Equity Ratio

3. Free Cash Flow

4. Current Cash Debt Coverage ratio

5. Cash Debt Coverage ratio

6. Price/Earnings Ratio [For the purpose of this ratio, use the market price per share as of the last working day of the year 2007 for each company]

After presenting your comments for each ratio in Column 4, summarize the findings of your comparison of the two companies' ratios under the headings Liquidity, Solvency and Profitability, and present your summary in a separate worksheet in the same Excel workbook. Remember to name the bottom tab of the worksheet "Summary and Conclusion".

Please upload your Excel file (just